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[BUG] Remote Control error banner non-dismissible + retry-loop spam when disabled by org policy (VSCode) #65794

Description

@mbasaran

Summary

When Remote Control is disabled by organization policy, Claude Code (VSCode extension) repeatedly attempts to connect. Each failed attempt logs an error to the transcript and re-raises a red error banner above the message composer. The banner's × (dismiss) button does not work — clicking it does nothing, because the connect loop immediately re-raises the banner.

Environment

  • Claude Code — VSCode extension
  • macOS (Darwin 25.5.0)
  • Remote Control disabled by organization policy

Steps to reproduce

  1. Use Claude Code (VSCode extension) in an org where Remote Control is policy-disabled.
  2. Observe repeated connect attempts in the transcript.
  3. Click the × on the Remote Control error: disabled by your organization's policy banner.

Actual behavior

  • Continuous retry loop — the transcript fills with repeated lines:
    Remote Control failed to connect: disabled by your organization's policy (observed 6+ times in a single session).
  • A red error banner Remote Control error: disabled by your organization's policy is pinned above the composer.
  • Clicking × does not dismiss the banner — it reappears immediately.

Expected behavior

  • A policy-disabled feature should not attempt to connect at all → no retry loop, no log spam.
  • At most a single, dismissible notice — not a repeating error toast.
  • The × should permanently dismiss the banner.

Notes

The non-dismissible × is really a symptom; the root cause is that the client keeps retrying a connection for a feature the org has intentionally disabled, and every failure re-raises the toast. Suppressing the retry/error entirely for policy-disabled Remote Control is the likely fix.

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    area:idebugSomething isn't workingplatform:macosIssue specifically occurs on macOSplatform:vscodeIssue specifically occurs in VS Code

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